This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

Some costs that are not included in construction expenditure are:

the cost of the land on which the rental property is built

expenditure on clearing the land prior to construction

expenditure on landscaping.

Some of this expenditure may form part of the cost base of the property for capital gains tax purposes. For more information, see the publication Guide to capital gains tax.

ExampleCapital works deduction (special building write-off)

The Perth property acquired by the Johnsons on 20 July 2000 was constructed in August 1991. At the time they acquired the property it contained the following structural improvements.

Item

Construction date

Retaining wall

September 1991

Concrete driveway

January 1992

In-ground swimming pool

July 1992

Protective fencing around the pool

August 1992

Timber decking around the pool

September 1992

In a letter to the Johnsons, a supervising architect values the construction cost of the rental property for special building write-off purposes at $115 800. This includes the cost of the house, the in-ground swimming pool, the protective fencing and the timber decking. Whilst the retaining wall and the concrete driveway are structural improvements, they were constructed before 26 February 1992 and were not included in the $115 800 valuation. Therefore, they cannot form part of the construction cost.

The Johnsons can claim a 2.5 per cent per annum deduction based on the construction costs for capital works deduction (special building write-off) purposes. As they did not acquire the property until 20 July 2000, the deduction is allowed for the 346 days from 20 July 2000 to 30 June 2001. The maximum deduction for 2000-2001 would be as follows:

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.